Client Briefing: Compliance, Conduct and Risk Bulletin October 2016

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1. FCA to consult on mortgage payment shortfall remediation guidance

The FCA have announced a consultation on guidance of the treatment of customers with mortgage payment arrears. This guidance covers remediation for mortgage customers who may have been affected by the way firms calculate these customers’ monthly mortgage payments.

As is widely-known, the FCA have stated that they have identified some 'automatic capitalisation’ which they consider to be a likely breach of FCA rules. The consultation is in respect of this process.

The aim is that the FCA produce framework to help firms identify a range of affected customers and will indicate a potential resolution and calculation for redress.

Find out more: Financial Conduct Authority 

2. CML responds to FCA’s plans for mortgage payment shortfall consultation

The CML have stated that lenders who used the calculation method that the FCA has identified as problematic were always fully transparent with the regulator on their arrears calculation and charging methods.

Paul Smee, CML Director General is quoted as stating: “Those lenders who used the arrears calculation methodology now identified as problematic did so in good faith, believing that they complied with the rules and were acting in customer interests...They are fully committed to delivering fair outcomes for all customers, past and present. Customers do not need to do anything. Once lenders have digested the regulator’s consultation and determined the most appropriate way to undertake the expected remediation, they will be in touch directly with affected customers.”

3. Speech: The role of consumer decision-making in ensuring good market dynamics in the mortgage sector

The FCA have published Christopher Woolard, Director of Stratefy and Competition at the FCA’s speech from the Mortgages Conference on 5 October 2016.

Mr Woolard looked at the Mortgage Market Review and commented on the FCA’s positive findings that there was no evidence of previous poor practices such as self-certification or interest-only lending without any credible repayment strategy. We found that lending looked to be affordable, and little evidence that creditworthy consumers were being prevented from obtaining loans.

Mr Woolard further looked at the importance of understanding consumers and of a competitive market.

Find out more: Financial Conduct Authority